Systems and Operations Management Practices at the Achiffa Organization - Essay Example

? Systems and Operations Management practices at the Achiffa Organization Anglia Ruskin 30th November EXECUTIVE SUMMARY Achiffa organization is a company that manufactures potato based frozen food products.It was started by Gary Achiffa Sr. who started as a farmer before venturing into business. The organization has grown into a large company that supplies its products to various supermarkets, food chains and markets around the world. After the organization was formed, Tom Granham was made the manager but later after the founder’s retirement, he was moved to Operation Management Department as a Director. The general manager’s position was left under Gary’s son, Gary Jr. Currently; the management of the company is under four directors in charge of Operation Management, Sales and Marketing, IT and Procurement, and Human Resource Management. Although the personnel are qualified, there are a number of problems in their respective departments that needs to be addressed. Handling the customers have become quit a problem because some of them demand more services than can be offered e.g. Quick & Tasty Food Chain. This has made the company to use logistic companies to carry out distribution of the products. A logistic company by the name of FeshDist has become very problematic because it is not consistent in the collection of products. This leads to accumulation of product in the warehouse (Thomas, 2007). Tom has been away for quite some time due to sickness and, this has resulted to failure in his department. The staffs are conflicting over small issues with excuses of Tom’s absences. They have led to complains in the warehouse where Bryan notices that different products are made in one shift. There is also a problem when a new brand is launched. It leads to confusions and complexity in the production schedules because the general manager gives it the first priority. This has led to narrowing of profit margins causing a great risk to the future of the company as noticed by the marketing director. The technology and the IT in the company are not modern and, these have resulted to wastage of electricity and also slow operations of the production process. Ivan in charge of the technology complains that the ovens are left on leading to wastage of energy. He also complains that, if the ovens are put off, they take a lot of time to heat again. Many of the departments in the company use manual methods of maintaining records and information. Bryan uses spreadsheet to record stocks while the sales and marketing department has to prepare records and then take them to other offices instead of using the modern information technology. INTRODUCTION Achiffa Organization is a company that manufactures potato based frozen food products. It was started by a man by the name Gary Achiffa Sr. who was growing potatoes in Idahi Falls. He later stopped growing potatoes after sensing the growth of fast food sector in US and stated processing the potatoes into French fries. Today, the company has grown and, it produces a variety of potato products which are then distributed in many cities. Although there is a significant growth in the organization, there are a number of things in terms of technology and operation management that needs to be changed in order to realize tremendous growth. The major products manufactured by the company are hash browns, wedges, waffles and French fries. If the company adapts the new technology, it will be in a position to make other products e.g. potato flakes, potato granules, potato powder among many more potato products (Moffatt and Hanley, 2001). The founder of the company stopped farming immediately he realized that the sale of the products could do well. When Gary opened the company, he decided to delegate the management duties to his friend’s son, Tom Granham. The founder of the company retired in the late 1990s leaving the management to his descendants. The company is still under the management of his children. Gary Jr. who is the current managing director has delegated his duties to other four directors on the board. Tom Granham is the Operations Director in charge of the main factory which is in Idaho Falls. All the technological developments lie under him. Considering that he has been in the company for a long period of time, Tom should use advanced technology in order to expand the organization. There is a need of using the modern technology to make sure that the company keeps pace with the competitors (Blumenthal, 1977). The other director is Jolene Carter who is in charge of marketing and sales department. The key duties are maintaining customer sales and relationships and looking for new contracts. According to Zoe (2007), Carter is supposed to use the appropriate marketing strategies in order to expand the business and also compete with other similar businesses. Carter should also apply the marketing techniques and models to maintain and to read the minds of customers in order to satisfy their wants. Supply Chain Department is under Vijah Shah who handles product distribution, Information Technology and Procurement. Shah is in charge of a very sensitive department that requires sophisticated management techniques. Information technology is advancing at an incredibly high rate (Warwick, 2008) and, therefore, modern technology should be adapted to keep pace with other companies. Supply management techniques should also be applied in the organization to ensure there is equilibrium in the supply chain (Li, 2007). This will be very helpful when handling procurements in the organization. The last direct is Achiffa Karen and is in charge if Human Resources where she handles issues to do with health, employment, salaries and wages, as well as safety. Employees in an organization should be handled like human beings and like tools (Mckee, 2003). This means that, the human resource manager should be aware of employee rights and stop exploiting them. Good management skills should be applied for good employee- management relationship (Eden and Sims, 1983). Customer handling Fast food restaurants are the largest and most profitable customers for Achiffa Snack Food. Since the opening of the organization, a food chain restaurant by the name Granters has been the most profitable customer of the Achiffa. The company has also won two contracts with Kellys, but their bargaining power is very high. They need to be supplied with the products at a very cheap price and, they are also known for their inconsistency. They change the orders every time. This shows a big problem on the side of the customer management because they need extra concentration. In addition, there are other three customers who are much driven by the price and, this makes them appear very hectic to manage. The company uses other extra expenses in paying the logistic companies e.g. FreshDist, which distributes, the products to regional distribution centers. These companies are not consistent and, they sometimes cause problems in the operations of the Achiffa. FreshDist sometimes picks the products late. According to and Vasa- Sideris (2000), these inconveniences are very dangerous to a company because they lead to delayed operations of the business. Considering that this is the second profitable category, there is an immense jeopardy of recording a loss if new methods are not adapted. Achiffa deals with Quick & Tasty Food Chain which maintains average demand throughout the year. It also insists on consistency making the Achiffa to give its warehouse to be used by Expresslt Logistic Partners to supply the products to the distribution centers. In the sales and marketing department, where Jolene manages, there is a problem with the salesmen as they are spending a lot of time in serving the customers forgetting other activities. This issue has to be addressed in order to ensure the department is runs smoothly. The company also produces a wide range of products which requires many processes to manufacture. The cost of production has been rising dramatically making the profit margin to narrow down. This is another issue that needs to be handled before it gets worse. Achiffa Idaho Brand Due too the popularity of Achiffas company, the managing director decided to make new brand bearing the name of Achiffa Idaho. However, the product brought complications in the production stages due to new production schedules. When new products are manufactured, Julia who was in charge of the by- products is chosen to launch the brand. The general manager is less concerned with the plight of customers and takes that chance to boost over their new product. They give much attention to the new brand ignoring other products. This has caused a lot of complications in production schedules causing confusions to the employees. With the profit margin narrowing down, the company is at a greater risk of losing its customers and hence the profit. The managing director and his delegate director, Julia Davenport forgets that the mainstay of every business is the customers. They give their own predictions about the sale of the products without doing a market survey and are even happy to see products in the store. They have not consulted the marketing manager either who analyses the market situation. According to Chambers, et al., (2011), this is a very sensitive case, and it needs to be handled very hastily. Operation management The production process involves a lot of stages which run continuously from storage of potatoes to the storage of the end product after packaging. The general relationship of the employees in the company is not good. Kevin and Chen are not in good terms, and they both seem to complain to each other every time. Kevin complains that Chen is very irresponsible, and he does not maintain the required cleanliness of the equipments and machines. He says that Chen throws everything through and that he does not check the bags. He suspects that Chen produces russets instead of Idaho. On the other hand, Chen complains that he is the only one who meets the required target, and he is forced to work extra hand to produce what Kevin had not produced during his shift. These complaints were brought by the fact that the operation manager has not been around. Communication between the employees in the company should be good every time. The employees seem to work only when supervised. They all see the problem but they cannot sit, and talk because of hatred. This is seen when they all agree that the production area and the equipments are not in order. Ivan sides with them but does nothing to solve the problem. Warehousing In the warehouse, Bryan takes the responsibility of ensuring that the temperatures are kept as expected and to regulate the stock. Although Bryan has worked in the company a five year, he has a problem with finished goods frozen area. He complains that the FreshDist and Jolene are giving him a headache. FreshDist is in charge of distributing the products to various distribution centers but, it does not do so as expected. This causes accumulation of products in the warehouse because the production in the company is continuous. Chen and Kevin are also giving problems because off producing different products in the same shift. This makes the arrangement of the products tiresome because they have to be sorted first. According to Smith and Tompkins (1998), the warehouse should be orderly for easy removal goods and safety. Technology and information technology When Gary Sr. realized that the major investment was needed in the production technology, he hired Ivan who had to source the equipment for double lines. The new hash brown was developed and later expanded to meet the required standard. Ivan complains that the area needs improvement. He says that a lot of energy is wasted because the ovens are kept more than expected. He says the batches are not scheduled effectively because if the ovens are put off, they take a lot of time to heat and may even fail to operate. Patrick says that there is no need of an expensive system because the company produces a few things. Tom and Patrick developed a system to work out the production schedules and set production targets, which are, used in the finance office but Bryan refused to have a similar one in the warehouse. He preferred use of a spreadsheet to record the stock. The marketing and sales department uses a constant system to manage customers and to do predictions based on the previous year’s figures and customer orders. They maintain the records manually and present them to the required offices. CONCLUSIONS In all the departments that make the Achiffa Company, there are problems affecting smooth operation of the company. There is difficulty in maintaining the contract with Kellys because of strong bargaining power. They are not consistent customers because they keep postponing orders and changing the quantities of the products needed. Quick and Tasty is another customer that needs excessive attention because they need flexible delivery of products to their centers. This makes the company to use logistic partners to supply the products as required. Bryan is forced to work with three chains to ensure that the food chain is given the services as expected. The company that handles Achiffa’s products is not consistent at all. They never pick the products in time causing delays which results to a lot of complaints form customers. The staff recommends it only because they are cheap. Manufacture of the new brand has caused a lot of complications in the production processes. It has made the general manager to give much concentration on it leave other products aside. This has caused a big profit margin, and it is closely observed by Jolene. In the operation management department, the employees are not in good term. It is noted that one of the employees is making the wrong product making this to bring confusions in the warehouse. The employee here shows irresponsibility because they ignore observable mistakes giving excuses of the director’s absence. The delay caused by FreshDist brings a lot of confusion to Bryan. He has to move the pallets around to avoid the accumulation in the store. In addition, different products are made in the same shift causing complications in the warehouse. In the IT department, there is no good system for efficient operations. The system used in the sales and marketing is manual causing slow operations. Bryan also uses a spreadsheet to record the stocks in the warehouse instead of an advanced system. In addition, the technology used is not modern because there is no conservation of energy. The ovens are kept on waiting leading to loss of electricity. RECOMMENDATIONS The organization needs to use the current and modern technology to improve on its production processes. The use of input- output model will be very effective. Here, the operation management transforms labor, land, equipments, materials, and capital into output (good and services) (Costa and Haykin, 2010). Use of this model will ensure that, the organization commands competitive advantage by taking control of transformational control that turn the raw materials into finished products (Muller, 1979 and Hanley, 2001). Through the use, of this model, the directors in the organization will be able to monitor other employees and the whole system well (Harry, 1985). When a new brand is launched, the system will be used to monitor the movement of the profit margin hence good decisions will be made. For example, the manager would be able to observe the change in profit margin and make decisions on whether to continue producing the new product or not. The organization can also use the 4V’s Typology Model to ensure that the customers’ orders and demands are processed hastily. The four Vs represent volume, variety, variation in demand, and visibility (Kull, 2007; Chuck, 2008). The volume of customers served is large, and there is no ability to serve everybody at the same time. But, this will ensure that the new orders are taken, and the existing customers are served efficiently. The company will also make many varieties of the products, new ones and the existing ones. By so doing, more personnel can be employed in the warehouse to reduce congestion of products as Bryan says. The fact that the company has a variety of personnel brings complications and confusions in some departments. The model will ensure good communication among the employees of the company (Dr Donald and McCubbrrey, 2011). Achiffa Organization experiences variations in demand, and this makes the demand be considered as average. According to the weather and seasons, they buy raw materials from different places and different prices. Use of this model will bring consistency in handling the customers (Charlie, 2007). The company should recognize and show appreciation to the employees because this will ensure there is good customer service. This can be achieved through holding meetings in the respective departments or calling for general meetings. The company should not limit itself to use of modern and advanced technology because of personal preferences of the employees. There is a need of using a database system ( Lewis and Nigel 2003) in the warehouse instead of using a spreadsheet but Bryan refuses. Use of business process map is another strategy that can be used to improve the operations in the company. The production process starts from the arrival of the raw materials to storage of the finished products. The fact that all the activities wait for customers and then process implies that the concentration should be on speed and quality and not much on cost ( Gifford, 2007). Good systems should be used (Ninemeier and Hayes 2006) instead of people who sorts out the products that are not in the right order. If they are not keen, they might end up making the wrong product. It is evident that the decisions made in the company are personal and decision hierarchy is not followed. In such a big company, group decision making should be observed (Saaty and Ozdemir, 2005). Every body’s views are analyzed and then the formation of geometric mean follows (Saaty and Forman, 1993). Through good decision making, the employees will be able to structure a problem as a system or a hierarchy with dependence loops as well as elicit judgments that reflect emotions, feelings, and ideas. They can use AHP process which capture priorities from a range of judgments and selection of the best alternative (Bhushan and Ria, 2004). The operations of the company can be effected through the use of CATWOE analysis. This is a form of business analysis that is concerned with an investigation of business needs and giving solutions to the existing problems (Checkland, 2006). Root definitions, a structured system description can also be used to better the company’s operations (Checkland, 1999). The operations will be run smoothly if there is the use of electronic communication channel for employees in order to share information and manage the company (Kurbanoglu, 1992). This system will help in the management of different department e.g. the sales and marketing department and operation department. REFERENCES Bhushan , N and Ria, K (2004). Strategic decision making: apply the analytical Hierarchy process, London. Pp 3-12 Blumenthal, A.L (1977). The process of cognition. Englewood Cliffs. Prentice Hall. Pp 3-6 Charlie, Gifford (2007). The Hitchhiker's Guide to Manufacturing Operations Management: ISA-95 Best Practices Book 1.0. ISA,.pp 10-30 Checkland, P.B (1999). Soft Systems Methodology in action., John Wiley and sons Limited Chichester. Pp 5-12 Checkland, P.B (2006). 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